Inflation surges on Covid lockdown

Inflation surged 5.56% in April, highest in six months, as the government enforced a countrywide lockdown to prevent a further spread of infections. In March, consumer prices rose by 5.47%.

Food inflation rose 5.57% as the season of Boro harvests started, while non-food inflation went up 5.55% from 5.39% the previous month.

Economists said the low-income people had already lost jobs and income, and increased prices of products only intensified their sufferings.

They are forced to buy less and less, which will have damaging impacts on nutrition and productivity, they said.

The prices of products were high during the lockdown last year as well. Inflation increased by 48 basis points to 5.96% in a month at the time. 

Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue, told The Business Standard that commodity prices may increase in any disaster due to disruptions in the supply chain. But there was no reason behind the increase in commodity prices in April as the government kept commodity shipment outside the purview of the lockdown.

Dr Fahmida said traders had increased prices, creating an artificial crisis of commodities during the lockdown, due to which the poor suffered more.

The government has no mandate to control the market in the open market economy, but there are some provisions to manage the market through sales at subsidized prices for the moderate poor and direct cash support to the extreme poor, she said.

Average inflation over the last 12 months – from May last year to April this year – stood at 5.60%, which was 5.63% in May 2019-April 2020 period, according to BBS data.

Urban areas faced 5.39% inflation in April, which was lower than 5.66% in rural areas.

Prices of food and beverage items increased by .93% in April, compared to March, and there were significant rises in costs of furniture, household equipment, transport and communication and medical and other services.

According to the BBS report, the overall inflation stood in rural areas at 5.66% in April, compared to 5.55% in March. Besides, the overall inflation in urban areas increased slightly to 5.39% in April, which was 5.31% in March.

In rural areas, food inflation stood at 5.88% in April, which was 5.83% in March this year.

Urban areas also observed 4.87% food inflation in April, an increase of 7 basis points from 4.8% in March.